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The infrastructure push by the so called "Quad" countries is likely to further raise strategic tensions across the region, as China and existing powers clash over Beijing's efforts to project influence into South East Asia and the sub-continent.

"I think it's very sensible that Japan is prepared to lead this new push, which also acknowledges there is a strategic element to infrastructure spending and development," said Peter Jennings, executive director of the Australian Strategic Policy Institute.

"I don't think we should assume infrastructure funding in the Asia Pacific can only come from China."

China plans to upgrade transport and infrastructure links across Southeast Asia and into Europe via its $US1 trillion Belt and Road Initiative (BRI), which has become one of the country's top foreign policy priorities. The main funding vehicles being used are its policy development banks and the recently established China-led Asia Infrastructure Investment Bank (AIIB).

Peter Jennings said the more he read about the BRI and AIIB the stronger his belief they might not threaten the established global order as much as some had imagined.
Jay Cronan

Foreign Minister Julie Bishop declined to comment on what was discussed at the Manila Quad meeting, but said "Australia, along with the US, Japan and India, supports greater investment in infrastructure in the region in order to enhance economic growth and connectivity".

"The Australian government continues to work closely with the ADB and World Bank in making an important contribution to regional infrastructure funding and policy," she said noting China's BRI was complementary to other initiatives.

"Much of the new competition for influence [in the region] is also being played out through infrastructure development," it said.

The Turnbull government has not signed up to the China's BRI, an ongoing point of tension in the relationship.

The infrastructure push by the Quad countries comes at a time when doubts are emerging over Beijing's capacity to fund and execute deals across the region.

David Dollar, a senior fellow at the Brookings Institute, noted the AIIB had lent just $US3 billion in its first two years of operations and 75 per cent of these loans were in conjunction with established multi-lateral institutions.

"The bottom line: It is too early to make a definitive judgment on whether China's finance is a challenge to the global economic order," he wrote.

"There are certainly things to worry about such as growing indebtedness of some of China's big clients and environmental and social safeguards on the ground. But there are also signs of evolution."

Mr Jennings said the more he read about the BRI and AIIB the stronger his belief they might not threaten the established global order as much as some had imagined.

"I'm yet to read anything about how well it's going," he said.

Problems with China's funding of major projects surfaced last month when Pakistan and Nepal pulled out of separate hydroelectric projects due to overly onerous loan terms.

On November 15, Pakistan said it had withdrawn from the $US14 billion Diamer-Bhasha Dam, part of the China-Pakistan Economic Corridor, due to the terms set by Beijing. China had reportedly demanded ownership of the project and wanted its own armed forces to provide security.

Around the same time Nepal said it would scrap a $US2.5 billion deal with Beijing-backed firm, China Gezhouba Group, to develop the Budhi Gandaki hydroelectric project, after concerns the project was agreed without a competitive tender process.